Monday, November 16, 2015

Peter Schiff: December Fed Rate Hike Possible

Peter now thinks a December Fed rrate hike is a possibility but says:

Well there’s two possibilities, right? One is that the Fed does in fact raise interest rates in December, and the other is that they don’t.... let’s take the first scenario, which I still believe to be the less likely of the two.

My view on this is the exact opposite. It is that a rate hike by the FOMC in December is the most likely scenario, barring a major market disruption, such as the Chinese mini-market crash before the September FOMC meeting, or a surprise major negative piece of economic data. If we don't get either I expect the Fed will raise rates by 25 basis points in December.

2 comments:

Bob, come one, get him on to do a podcast with you. Don't make it an argument though. Make it a discussion, with the purpose of outlining the principles that underly your respective positions. This would be a tremendous learning experience for everyone listening. Or, go on his show and do it. It doesn't matter. Make this happen.

Ratfink, you are correct. RW and Rick Fitz above are taking Fed pronouncements and purported decision-making as stewards of the economy at face value. A few sips of the Kool-aide apparently. Starting to believe the public consumption cover stories. Losing sight that the Fed by nature is a TBTF bank cronyist manipulation organization. That's why it was created. That's why it exists. That's what it does.

Fed governors are not here on some idealistic crusade to "save the economy from itself." The practical, on-the-ground, incentives the Fed leaders face is to maximize their personal prestige, personal financial futures, and personal relationship networks that got them their jobs and sustain their livelihood and professional and social standing. The organization they head is dedicated to manipulating the economy to maximize banker profits without tanking the economy in the process. Carefully, systematically bleed the economy of its wealth over the years into the pockets of the bankers and government to maximize long-term total wealth transfer without killing the productivity generating that wealth in the process. To “milk the cow” as aggressively as possible, but not so much as to compromise long term yield.

These are the same sorts of personal incentives that all delegated managers of cronyist operations face - to enrich their superiors whom they cater to and who influence their fate. Fed governors will respond as all humans do whether they are aware of what’s going on or not. They will come up with whatever plausible cover story for whatever actions are expedient that keep their bread buttered. They are as "data dependent" on whether to raise rates as Punxsutawney Phil is dependent on seeing his shadow for deciding if winter will end. The BLS statistics and impenetrable math they say they “rely on” is obfuscated, complex, and manipulated for a reason – they can “see” in such data whatever is expedient for them to see.